Critical U.S. Federal and State Tax Considerations for Digital Nomads: Tax Residency, Local Source Income, Reporting

Advising taxpayers on issues relating to being a digital nomad has become more prevalent as taxpayer's employment or business operations can be done in any jurisdiction within the U.S. or abroad. Tax professionals must navigate various federal and state tax residency rules, IRS examination guidance, and state regulations to implement effective tax planning strategies for these taxpayers.

A digital nomad refers to those who leverage technology to work remotely and often choose to live in different countries for short timeframes which presents unique tax challenges. These taxpayers must understand tax regulations from their home jurisdictions as well as those where they temporarily reside and implement tax planning techniques to minimize adverse tax consequences.

Federal tax residency rules applicable to individuals or businesses are relatively straightforward but can be burdensome to evaluate depending on the facts and circumstances. Tax treaties seek to eliminate or reduce double income taxation, and benefits are available to digital nomads who are nonresident aliens and U.S. citizens living abroad under some conditions. Due to the critical nature of residency for tax purposes, digital nomads must understand residency rules and applicable tax treaties that will determine if they are subject to taxation, the necessary forms to file, and if they qualify for any exemptions and credits.

Listen as our panel discusses key components of federal and state residency rules, determining tax liabilities of individuals and businesses, challenges for digital nomads, the applicability of income tax treaties, allocating income between jurisdictions, and utilizing exclusions and credits.

1. U.S. tax rules impacting digital nomads
2. Residency and tax consequences
3. Utilizing tax treaties, exclusions, and credits
4. Tax planning strategies and best practices

The panel will discuss these and other key issues:

• Key areas of focus for determining tax liabilities of individuals who are digital nomads
• Purposes of income tax treaties and their applicability
• Determining residency for tax purposes
• Allocating income between jurisdictions
• Navigating tax regulations of multiple jurisdictions for digital nomads
• Current planning techniques and best practices for tax professionals

Learning Objectives

After completing this course, you will be able to:

• Recognize the importance of both citizenship and residence in determining tax liabilities of individuals
• Identify components of U.S. tax treaties and their applicability
• Acquire methods for allocating income between jurisdictions in accordance with residency rules
• Ascertain methods for handling nonresident audits

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of partnership tax rules, corporate structure, and state audit and tax regulations.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).